In the latest Budget, the government announced a major change to the Department for Work and Pensions (DWP) Career’s Allowance, affecting many carers across the UK.
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If you’re a caregiver or know someone who is, here’s everything you need to know about this update and what it could mean for you.
What is a carer’s fee?
Carer’s Allowance is a weekly payment from the government for people who spend at least 35 hours a week looking after someone who needs care.
Currently, around 1.4 million people across the UK claim this benefit, which costs £81.90 a week.
To qualify, a caregiver must look after someone for at least 35 hours each week, and there is a limit on how much they can earn if they work in addition to providing care.
Current wage law
Until now, carers were allowed to work and claim Carer’s Allowance but had a strict weekly earnings limit of £151 after tax, National Insurance, pension contributions, and any other allowable expenses.
If they go even £1 over this amount, they lose their Carer’s Allowance for that week.
This “cliff-edge” rule has created financial difficulties for many, as changes in working hours or overtime can cause them to inadvertently skip, leading to sudden loss of earnings and even accusations of benefit fraud.
The current law has been a source of frustration for many caregivers who often cannot control their weekly income, especially with working hours that can change at a moment’s notice.
Campaigners, including senior figures such as Martin Lewis, have been calling for a rethink of the hard salary cap.
What is changing?
In April 2025, there will be a big change. The chancellor has confirmed that the benefits cap will be lifted
It will allow carers to work an extra 16 hours a week (if they are paid less).
This means that carers will have more flexibility and can earn more while still being able to claim Carer’s Allowance, without the risk of losing their entitlement with small changes in their income.
For many, this will be a huge relief, especially as the cost of living remains high and every income can make a difference.
This change aims to make it easier for carers to balance their work and caring responsibilities without the constant worry of losing their benefits.
Why was this change necessary?
Over the past few years, there has been a growing outcry from carers who have been forced to pay back thousands to the DWP because they unknowingly exceeded the wage limit.
By May 2024, the DWP was already trying to refund more than 134,800 people who had been overpaid their Carer’s Allowance.
The system has been widely criticized as confusing, as even a small increase in income, such as extra hours worked or an unexpected bonus, can push carers over the income limit without realizing it.
This led to situations where honest mistakes were treated as fraud, with guardians facing financial penalties.
This change will help many people feel more secure in managing their finances, especially in jobs where hours and income are not always predictable.
What does this mean for you as a caregiver?
The change to the earnings limit means that if you are a carer, you will be able to work and earn more without fear of losing your Carer’s Allowance.
This will provide more financial flexibility and peace of mind, allowing you to focus more on providing care while being able to support yourself.
However, with this shift, it’s always a good idea to check the latest guidance from the DWP to understand exactly how this will work.
For example, it is not yet clear whether there will be a different threshold or other changes to eligibility requirements, so keeping an eye on DWP updates will be important.
Final thoughts
This change is a positive step to support caregivers, who provide essential care and support to their loved ones while often facing financial challenges themselves.
By removing the strict salary cap, the government gives caregivers some breathing room, reducing the risk of financial penalties for small increases in income.
If you receive Carer’s Allowance or think you may be eligible, make sure you stay informed and check updates from the DWP on how these changes will play out.
Every piece of income is important, and this review could make a real difference in helping caregivers across the country live financially secure lives while continuing the important work they do.
Ricky Willis is the original Father of Skint. An entrepreneur, father, and husband of Naomi. He is always looking for unique ways to earn extra money.
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